Akahu has just put a very low price on the alternative to card fees. Its new Pay by Bank product charges merchants 0.1% of the transaction, capped at 5 cents plus GST. That means, as chief executive Ben Lynch puts it, “a $100 payment costs five cents, and so does a $1000 payment.”
For any business paying card fees, that is close to free. The question is no longer whether pay by bank is cheaper. It is whether customers will change habits quickly enough for the saving to show up in a profit and loss statement.
The regulator has already done the maths
The timing is deliberate. Three weeks ago the Commerce Commission estimated that switching from Visa and Mastercard debit to open banking could save businesses about $180 million a year. Debit acceptance costs an estimated $340 million annually. The same volume through bank-to-bank rails would cost roughly $160 million, a $53 saving for every $100 spent.
The Commission’s comparison table puts card debit at 0.70-2.65%, with payouts taking one to three business days. Open banking providers ranged from BlinkPay at 0.49-0.59% to POLi at 1% capped at $3. Akahu was listed at 15 cents per transaction. It has now cut that by two-thirds.
The broader context is ugly for a small economy. In 2025 the Commission found NZ businesses were paying roughly $1 billion a year to accept Mastercard and Visa, including $600 million in interchange. Even after successive caps, our domestic credit card caps remained more than double Europe’s. Last month’s cap on commercial credit cards, worth an estimated $40 million a year from April 2027, targets a weighted average rate of 1.40%, nearly double Australia’s 0.8%.
Regulation has trimmed the bill. A competing payment rail could make the networks compete for the business instead.
More than a cheaper fee
Akahu is pitching more than price. Unique transaction references automate reconciliation. Balance checks avoid dishonour fees. Strong customer authentication cuts fraud, and enduring consents allow repeat variable payments without re-authorising each time. Simplicity is already using it to let members push money straight into their accounts.
For subscription businesses, landlords, professional services firms and anyone chasing invoices, that is a genuinely better product, not just a cheaper one. Money also lands faster than a card settlement that takes up to three days.
This did not come from nowhere. Back in 2024, Akahu’s Josh Daniell told the Commission that “regulation is clearly required in order to create a thriving open banking ecosystem”. The Consumer Data Right and all five big banks going live gave Akahu the infrastructure. Pay by Bank is the product built on it.
Growth is real, the checkout is untouched
Adoption is climbing. June was the first month open banking payments crossed $100 million, up 24% on May, across 362,869 payments from 198,775 unique customers. But fewer than 200,000 people in a month is a small user base when the payment system processes millions of card taps a week.
The pattern of use matters more than the totals. Pay by bank is winning considered payments such as rent, invoices, top-ups and transfers, where someone is already willing to open a banking app. It is barely present at the café counter or the supermarket, where most card fees are actually collected.
That was the warning in a 2024 paper for the Commission by Dutch economist Dr Wilko Bolt, who found consumer-to-business account payments remained a challenge “especially at the point-of-sale”, and said both consumers and merchants needed to be convinced at the same time. Card rewards, chargeback protection and universal acceptance are habits merchants cannot price away.
Who gives shoppers a reason to switch
This is the policy gap. A merchant saving dollars per transaction has every incentive to switch. The customer, who sees none of the card fee, has almost none. NZ’s surcharge ban removes the price signal that would show shoppers which method is cheaper.
In 2025, University of Auckland academics Alexandra Andhov and Jodi Gardner argued that under a ban, the cost “won’t have vanished, it will merely be hidden.” They pointed to the Netherlands, where iDEAL’s fees below 0.2% mean shoppers do not need a credit card to buy online. iDEAL won because it became the default at checkout, not because merchants pleaded with customers.
What businesses should do now
The practical move is to stop waiting for retail habits to change. Any business taking larger, repeat or invoiced payments should offer pay by bank now, because that is where it already works and where the savings per transaction are largest. Retailers should test it online, nudge customers with discounts that are legal under the ban, and watch the numbers.
Lynch hopes the fee is low enough to become “just a cost of doing business.” He may be right for invoices by Christmas. Retail checkouts will take longer, and will require someone, whether banks, merchants or regulators, to give shoppers a reason to stop tapping.
Sources
- RNZ: Pay by Bank takes aim at card fees (2026-11-04)
- interest.co.nz: Commerce Commission says open banking cheaper for businesses than Visa & Mastercard debit (2026-10-15)
- Commerce Commission: Pay by bank (open banking) costs businesses much less than Visa and Mastercard (2026-10-15)
- Commerce Commission: Interchange fee regulation for Mastercard and Visa networks final decision (2025-07-17)
- interest.co.nz: Businesses are paying too much to accept commercial credit cards (2026-10-22)
- Akahu: Submission on Commerce Commission designation of the interbank payment network (2024-05-10)
- Newswire: Pay by bank passes $100 million a month in New Zealand (2026-07-31)
- Commerce Commission: Dr W Bolt expert support on costs to businesses and consumers of card payments (2024-11-22)
- BusinessDesk: The surcharge ban looks like a consumer win. But is it?
- The Conversation: Banning contactless and credit card surcharges won’t help, open banking reform is what’s needed (2025-08-07)
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